The U.S. Supreme Court last year refused to side with the industry in so-called pay-to-delay deals. Instead, it pulled back the insulating legal blanket the industry had been wrapped in, ruling the deals must be fought on a case-by-case basis. Now AstraZeneca ($AZN) is first up to see how juries will respond, facing potentially billions of dollars in damages if it loses.
The case, which Bloomberg reports is slated for closing arguments today, also could affect how the industry deals with patent challenges in the future. "The Supreme Court opened the door to cases like this," leaving it up to such legal showdowns to "determine what exactly is a large and unjustified payment," Boston lawyer Daniel Lev told Bloomberg.
The case in federal court in Boston involves a 2008 settlement the U.K. company reached with India's Ranbaxy Laboratories to hold off on bringing to market a generic of its blockbuster heartburn med Nexium. The plaintiffs, which represent pharmacies, wholesalers and consumers, contend AstraZeneca made deals worth about $1 billion to delay the launch until the patent ran out in May 2014, a sum they say amounts to a pay-off that has cost consumers significant sums over time. Drugmakers contend the settlements don't keep copies from getting to market any sooner than they are slated to and keep costs lower by preventing pointless and unnecessary legal expenses.
The Federal Trade Commission, which filed the case on which the Supreme Court decided, claims there were 40 pay-to-delay settlements in 2012 alone and that they are pushing up costs to consumers and pharmacies by $3.5 billion a year.
If AstraZeneca loses the case, a second trial will be required to decide just how much AstraZeneca would forfeit in the deal. That could be substantial, given how much AstraZeneca earns from the drug. It has brought in $2.8 billion so far this year and continues to enjoy a generic-free market. Because of a completely unrelated fluke of circumstances, there are no copycat versions out yet. Ranbaxy was given a 180-day, first-to-file exclusive for the drug but the plants where it was to be made are currently banned by the FDA from shipping to the U.S., leaving in question whether the agency will allow other drugmakers to release their versions or wait until Ranbaxy solves its problem.
Whatever the decision in the trial, the outcome will give drugmakers, and challengers, some insight into how juries respond to their positions and potentially change the way the industry deals with patent challenges.
It will at least provide some "clarity" said, New York antitrust lawyer Richard Steuer. "It'll get very close attention from everyone in the healthcare community."
Special Reports: Top 10 pharma companies by 2013 revenue - AstraZeneca | Top 10 drug patent losses of 2014 - Nexium
- read the Bloomberg story
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